Oral reply to PQ on Credibility of Carbon Products traded through Singapore

Questions

Ms Janet Ang: To ask the Minister for Trade and Industry in light of Singapore's ambition to become a global trading hub for climate-related services, what is being done to ensure the credibility of carbon products to be traded through Singapore and to reduce Singapore's exposure to the risks of carbon trading.

Ms Cheryl Chan Wei Ling: To ask the Minister for Trade and Industry in view of Singapore’s import of the first carbon-neutral liquified natural gas cargo (a) what agreement is in place to require the cargo suppliers to provide a statement of the greenhouse gas (GHG) emissions of each cargo; and (b) what mechanisms will be applied to monitor the carbon credits used to offset the GHG emissions of each cargo.

Oral Answer (to be attributed to Second Minister for Trade and Industry Dr Tan See Leng)

1. As announced under the Singapore Green Plan 2030, Singapore aims to be a leading carbon services and trading hub, as we seek to create new business opportunities and jobs in the green sector for Singaporeans. Our country, Singapore's robust legislative, commodities trading and financial services foundation has put us in a good position to grow an internationally-trusted carbon services and trading eco-system in Asia.

2. Today, the carbon trading eco-system in this region comprises primarily of the trading of voluntary carbon credits. These credits are used by companies to meet their voluntary corporate climate targets, alongside other decarbonisation strategies.

3. The main risk for buyers in voluntary carbon credits markets has been on the integrity and the quality of such carbon credits. The Government is working with industry, with international and local experts, as well as environmental groups to address this risk.

4. First, we are developing a taxonomy and guidelines on the quality of these carbon credits. Second, we are exploring the use of technology to improve the verification of these credits. In December 2020, DBS and Temasek, with Google Cloud, NUS, Verra and the World Bank as partners, launched the Sustainable Xcelerator to improve the efficiency of verifying emissions reductions and sequestration. Third, the Emerging Stronger Taskforce Alliance for Action on Sustainability is also looking at establishing a marketplace and exchange to improve transparency in carbon credit transactions.

5. Alongside carbon trading, there are opportunities in the carbon services market. For example, we aim to anchor key activities in Singapore, such as in project development, carbon credits trading, financing and measurement, reporting and verification services. We will continue to work with like-minded partners to support the development of an overall well-functioning global carbon market, and build capabilities and capacities to grow our local eco-system.

6. To answer Miss Cheryl Chan's question, organisations can use carbon credits, alongside other decarbonisation strategies, to mitigate the greenhouse emissions resulting from their operating units or businesses. Today, this is done on a voluntary basis to meet companies' climate targets.

7. Pavilion Energy has announced that it had imported the first carbon-neutral liquefied natural gas cargo into Singapore in April 2021. Under this commercial arrangement, Pavilion Energy required its suppliers to provide a statement of greenhouse gas emissions of each cargo, measured from the production of the gas to the delivery to end-users in Singapore. Pavilion Energy then offsets these greenhouse gas emissions by retiring a corresponding amount of carbon credits sourced from its portfolio of carbon offset projects in Peru and China. Pavilion Energy has published the amount of emissions it has offset from the two projects, which are certified under the Verified Carbon Standard and the Climate, Community and Biodiversity Standard.

8. While the Government today does not regulate voluntary offsetting activities, we are working with the industry, international and local experts, as well as many environmental groups to develop – as I have alluded to earlier on – a taxonomy and guidelines on the quality of these carbon credits. The guidelines can then be adopted by companies undertaking commercial agreements in carbon offset activities.